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tutu Dey | Wednesday 17 March 2010 ( 55 Comment)
5.1 Recognizing Capacity Problems
Excessive levels of fish harvesting capacity have been heldlargelyresponsi
for:the degradation of marine fisheries resources,the dissipation of food production potential, andsignificant economic waste, especially manifest in the form ofredundant fishing inputs.Yet, while many concerns about the need to resolve capacity-relatedproblems have been expressed by scientists in different disciplines,little has actually been accomplished in terms of addressing excesscapacity and overcapacity directly, especially in thefisheriessector
However, the situation is changing. The globalization of thisphenomenon and the impact of excessive fishing capacity on thebiological and economic condition of many fisheries throughout theworld have been a matter of increasing concern in recent years (FAO,1997).For example, in 1998 the FAO established a technical working group(TWG) on the management of fishing capacity to review the variousissues related to measurement and monitoring, management and reductionmethods, broader policy and institutional considerations as well asspecific high seas aspects of the issue. The TWG stressed the crucialneed for countries and the international community at large to takesteps to address and to prevent overcapacity as recommended by the1995 Code of Conduct for Responsible Fisheries (CCRF) and produced awide consensus on the need to:develop more appropriate measurement methods and monitoringmechanisms, including a fishing vessel registry program;give far greater emphasis to fleet monitoring and the assessment offleet dynamics;adopt policies which clearly specify access conditions;give a greater priority to management methods aiming atadjustingrather
than blocking the pervasive tendency for overfishingandoverinvestme
that results from open access conditions;reassess and strengthen management methods currently used andimplemented, recognizing that available management methods aresituation specific; andapproach the reduction of fishing capacity with care, in order to tryto avoid spillover effects and to carefully control the inducedeffects of scrapping programs.5.2 Incorporating Capacity Issues IntoManagementPropo
management approaches designed to solve the fishharvestingcapac
problem in industrial fisheries typically have notexplicitlyincor
the two different concepts of excess capacityandovercapacity
Furthermore, even where there have beendistinctionsmad
between incentive adjusting and incentive blocking managementapproaches, the distinctions of the impacts of thesemanagementappro
and their respective impacts on overcapacity have not beenseparated from their impacts on excess capacity.Most proposed management approaches for commercial fishharvestingcapac
have also not differentiated between small and largescaleproduction
platforms. Similarly, the issues of excess capacityandovercapacity
in recreational and artisanal fisheries have not beenexplicitly addressed in managementapproaches.Harv
capacity management regulations have also not been relatedto strategic fishery management goals. Most proposed fishharvestingcapac
management regulations implicitly or explicitly assume thateconomic efficiency is the desired objective. In actuality,thepreservation
of fishing-dependent communities or of communities whichdepend on artisanal fisheries for their survival may be equallyrelevant, if not higher priority, social objectives. For example, anallocation of the total catch level between commercial andartisanalfisher
that is economically and biologically sub-optimal may berequired to preserve an artisanal fishing community; however, giventhat strategy and choice for sub-optimal allocation, the catch shouldbe harvested as economically efficiently as possible; i.e., with theminimum level of harvest capacity for both sets offishermen.These
sorts of additional management concerns need to be brought tothe forefront of the fish harvest capacity debate, andtheestablishmen
of second-best bioeconomic criteria for theirevaluationneeds
to bereaffirmed.Once
a fishery has been identified as having unacceptable levels ofexcess and overcapacity, a set of regulations that willcontrolcapacity
in the short run and reduce capacity levels in the long runneed to be developed by fishery managers. Capacitymanagementstrat
have focused on incentive blocking and incentiveadjustingmeasur
(FAO, 1998).Incentive blocking measures can be argued to be measures that aredesigned to hasten the market adjustment of excess capacity. Theseshort run solutions mitigate harvesting capacity by stopping orslowing its growth rate, but they do not change the market incentivesthat caused the overcapacity in the fishery.[30]Incentive adjusting measures are designed to eliminate overcapacity bycorrecting the open access market externality endemic infisheries.These
long run solutions to correct overcapacity change theregulatoryenvir
to create market incentives that reduce capacity levels ina fishery.[31]Cunningham and Greboval (2001) have provided a background to the needfor managing fishing capacity as well as a review of the technical andpolicy issues that arise in doing so. Guiding principles based on theCCRF are used as the basis for examining the origin, consequences, anddynamics of excessive fishing capacity development. Noting theproblems associated with free and open access, together with theissues that arise when attempting to manage fisheries under suchregimes, the authors reviewed a variety of the possiblemanagementactio
- such as economic incentives and disincentives, individualquotas, limited entry, and co-management - in terms of their abilityto reduce fishing capacity. The likely effect andconstraintsasso
with these measures were also examined.[32]5.3 Incentive Blocking Capacity MitigatingMeasuresIncenti
blocking measures attempt to block the open accessfisheryeconomic
incentive to increase fishing fleet capacity and include:limited entry programs,buyback programs,gear and vessel restrictions,total allowable catches,vessel catch limits, andindividual effortquotas.Complian
is a problem with incentive blocking measures tocontrolcapacity
If a fishing firm is prevented from maximizing profits forits scale of production by a fishery management regulation, then anincentive has been created to circumvent the regulation. That is, if adifferent fishing strategy can be employed or if another factor inputcan be substituted for the controlled input, fishermen may violate thespirit of the regulation; e.g., widening a boat in response to alength restriction. If circumventing the regulation is not possibleand the probability of detection and conviction are sufficiently lowto cause the expected value of the fine to be less than the lost netrevenue, then fishermen may adopt strategies to violate the letter ofthe regulation.The solution to these compliance problems is to carefully craftfisheries management regulations and to provide sufficiently largepenalties and enforcement levels that the expected fine creates asufficient disincentive for fishermen considering violating either theletter or the spirit of the regulation.Unfortunately, no evidence exists that strict compliance will lead toa reduction in capacity in a fishery.5.3.1 Limited entryLicense limitation is not by itself a sufficient measure to reducecapacity, and it requires other mechanisms to control the rate ofincrease in capacity that can take the form of:capital stuffing (where a vessel’s horsepower, length, breadth, andtonnage can increase);changes in gear and fishing periods or areas; andadoption of new technological innovations in fishing gear.Limited entry licensing did not prove to be effective in Mexico, forexample, because enforcement lacked the capability to determine ifvessels actually fishing had a license (FAO, 1998).Modifications to license limitation programs to addresscapitalstuffing
of licenses allows new entry to occur asexistingfisherm
exit the fishery. While the charge for the license capturessome of the rents generated by the stock, it does not prevent capacityfrom increasing over the long run. The rate of increase of capacity isreduced, but it continues to increase overtime.Fractional
license programs assign each participant in a limited entryfishery a portion of a license to fish. As an example of how afractional license would work, the holder of such a license would berequired to buy another fractional license from another fisherman toobtain a whole license. As a result, the total number of licenseholders in a fishery could be reduced.5.3.2 Buyback programsVessel and license buyback programs are being proposedandincreasingly
used as a management instrument to reduce excess fishharvesting capacity. Such program literally buy and removes vesselsand/or licenses from a fleet to decrease capacity. Many countries haveexperience in operating buyback programs including Japan, the UnitedStates, Canada, Norway, Australia, the European Community, and Taiwan.Similar motivations and goals existed in each program even though themechanics differed; some programs purchased licenses instead ofvessels, whilst others restricted license use or participation incommercial fishing. Typically, the conservation of fish, improvementof economic efficiency through fleet rationalization, andtransferpayment
(such as disaster aid to the fishing industry) are the goalsof vessel buyback programs.Holland, Gudmundsson, and Gates (1999) examined vessel and permitbuyback programs in a number of fisheries around the world to evaluatetheir efficacy and discovered that, while the program objectives areusually similar, the design details of the different buyback programsvaried widely. The authors concluded that, although the proper designof buyback programs can improve the immediate performance of this sortof approach, the programs have not generally been an effective way toachieve their stated goals of reducing capacity.At best, buyback programs may reduce capacity be reduced in a fisheryin the short run; however, as long as the open accessfisheryincentiv
remain, improvements in stock abundance willattractaddition
capacity into the fishery. If the market incentives arecorrected through regulatory and management changes, thenindividualfishe
are more likely to conserve their resource stocks includingthe stock of fish and then buyback programs would be moreeffectivebecaus
then resource rents are captured by the regulatory instrumentthat grants access to the fishery.5.3.3 Gear and vesselrestrictionsGea
and vessel restrictions attempt to control capacity bycontrolling the use of inputs in the production of fishing effort.Minimum mesh sizes (New England Groundfish Fishery), restrictions onthe number of pots or traps (Florida Spiny Lobster Fishery), limits onthe length of longlines, or the banning of gear (Florida trawl gear)are methods that have been employed in various fisheries. Regulating avessel’s physicalcharacteristics
to control capacity have also beenused.In general, fishermen circumvent the regulations by substituting otherfactor inputs or new types of gear for the inputs that havebeenrestricted.
Vessel length restrictions have been circumvented byincreasing the beam of a vessel or improving the horsepower of itspower plant. In the Florida finfish fishery, fishermensubstitutedtarp
for trawl nets and continued to fish under a net ban.5.3.4 Total allowable catchTotal allowable catch (TAC) is used to maintain or rebuild fish stocksby establishing catch quotas for domestic fisheries, to allocate afish stock between different fishing gears or user groups, and toallocate international stocks between nations.At the Technical Working Group meeting, “There was general agreementthat TACs used in isolation in virtually all situations are aninvitation to disaster, that is, to speedy growth of fishing capacity”(FAO, 1998). As stocks of fish recover due to reduced fishingmortality, rents appear and attract new capacity into the fishery ifentry of new fishermen or the expansion of existing fishing effort isnot controlled. As a result, a race for fish or fishing derby developsthat results in increased harvest capacity, shorter fishing seasons,and higher harvesting costs needed to land the same amount of fish ina shorter period of time. When approaching the limits of a bindingTAC, sufficient real time data may be difficult to obtain to use as abasis to close the fishery, resulting in frequent overruns of the TAC.These large landings over short time periods frequently result inexcess processing capacity; i.e., the peak load problem. This resultsin excess-capacity and idle capacity in the fish processing sector.5.3.5 Vessel catchlimitsIndividua
vessel catch limits are a form of individual quotawithouttransfer
between fishermen.By restricting the amount of fish landed, the race for fish can beslowed which is one indication of excess capacity in afishery.Stagger
or tiered catch limits have been used in fisheries to allowfull time or specialist fishermen higher catch limits than part timeor generalist fishermen; e.g., the Gulf of Mexico red snapperfishery.Fisherm
could circumvent catch limits by landing fish at out of theway docks and ports. Vessel catch limits could have applications incommunity-based fisheries and where landing sites arerestricted.5.3.
Individual effortquotasIndividua
effort quotas (IEQs) limit the fishing effort a fishingcraft can apply to a fishery. Usually a restriction is placed on trawltime, time away from port, or fishing days that the vessel can employ.Where IEQs are transferable, fishermen can purchase IEQs fromexistingfisherm
or sell to new entrants. However, as with vessel catchlimits, enforcement is difficult since effort is expended away fromport and restrictions can be evaded.As with gear and vessel restrictions, capital stuffing is acommonoccurrenc
under IEQ programs. While days fished or trawl time mayremain constant, the fishing power of the vessel can be increased bysubstituting other factor inputs in the production process for thefixed effort variable causing the effective fishing effort of thevessel to increase. As a result, fleet capacity can increase over thelong run.5.4 Incentive Adjusting Capacity CorrectingMeasuresIncenti
adjusting measures offer long run strategies tocontrolcapacity
by changing the regulatory environment to createmarketincentive
that causes fishermen to adjust their fishingcapacity.Measur
in this category include:individual transferable quotas (ITQs),taxes,royalties,group fishing rights, andterritorial use rights (TURFs).These sorts of fishery management regulations eliminate the openaccess externality by causing fishermen to behave as if they own thein situ fishery resource. When fishery resources are no longer free towhomever harvests them first, fishermen are willing to invest in thefuture by conserving the fishery resource as well as other resourcesused to harvest fish.As a result, overcapacity is eliminated in the fishery.5.4.1 Individual transferablequotasIndividua
transferable quotas (ITQs) are effective atcontrollingcapa
in the fishery to which they are applied.While self-adjusting with regard to capacity, ITQs are not believed tobe practicable in all cases. Questions have been raised regarding theapplication of ITQs to highly variable fish stocks, such as the Gulfof Mexico shrimp fishery, and to multi-cohort stocks because ofconcerns with high-grading catch. Bycatch is another issue that hasbeen raised with regard to ITQs that has not been adequatelyaddressedempiri
A capacity cascade or spillover of capacity may occur ifITQs are sequentially adopted in a series of fisheries. Processors whohave overinvested in inventory capacity in response to derby fisheriesmay face severe economic impacts if excluded from the initial ITQallocations.However, for fisheries in which ITQs have been applied,substantiallong
run declines in capacity have been observed. Moving beyond issuesof improved market performance under individual transferable quotasystems, Arnason, (1998), specifically addressed the effect thatindividual transferable quotas have had, as management instruments, onexcess and overcapacity. He found that new investment in fishingcapital had been reduced and that the fishing fleet contracted underthe individual vessel quota system in Iceland. Indeed, in someIcelandic fisheries, the number of operating units and, as a result,fishing effort levels dropped significantly. In addition, an analysisof economic rents and the value of quota shares indicatedthatsubstantial
net economic benefits were being generated by thismanagement system.5.4.2 TaxesWhile a tax on landings is theoretically equivalent to ITQs inreducing capacity in a fishery, little empirical evidence of theiractual impacts is available.A serious problem in developing taxes is determining the optimal taxrate to apply to the fishery at each point in time. That is, theamount of capacity in a fishery depends upon the abundance of fish,the ex-vessel price, and the unit cost of fishing effort at each pointin time. As costs, prices, and abundance fluctuate, capacity levelsneed to be adjusted by the appropriate tax. The tax needs to beadjusted on a timely basis. With ITQs, these adjustments occur in theITQ market automatically to determine the optimal capacity level. Withtaxes, a government authority has to determine the appropriate leveland when to change it to optimally control capacity. In Asiancountries, a tax on landings caused widespread protests amongst smallscale fishermen and consumers who expected the taxes to result inhigher prices (FAO, 1998).5.4.3RoyaltiesRoyalt
are similar to a tax on landings in their effect on reducing capacity.A fee paid per pound of fish landed or on quota holdings to themanaging authority would theoretically reduce the ex-vessel pricereceived by fishermen which would slow the rate of growth inharvestcapacity
in a fishery. New Zealand is the only country that has triedthis approach prior to implementing management cost recovery. In theUnited States, this method is used by the Department of Interior forrecovering rents in natural resource extraction activities (e.g.,offshore oil leases) and could be employed in fisheriesmanagement.5.4.
Group fishing rightsCommunity-based and co-management systems have been introduced inseveral countries with some success at controlling andreducingcapacit
However, they are not expected to perform well where thereis no institution building capability, when membership cannot berestricted, or when the ability to enforce rights and rules does notreside with the community.For group fishing rights systems to be effective, it is essential thatthe group be able to exclude outsiders; i.e., that the group right isenforceable. In addition, if the costs of reaching anenforceableagre
(transaction costs) are not too great, communitybasedmanagement
may be fully efficient. If the transaction costs are toohigh, the outcomes may be undesirable.Community-based management methods have proven to be effective in somecases; e.g., Senegal, Japan, and, during the 1940’s and 1950’s, theGulf of Mexico shrimp fishery.In the United States, the National Marine Fisheries Service (NMFS) andthe Fisheries Management Council system may be considered aco-management system that has been unsuccessful incontrollingcapa
in domestic fisheries.Community-based management is attractive because of theimprovedproximi
of the decision-makers to the consequences, but the widescope of potential decisions and outcomes means that capacity issuesmay not be adequately resolved. Quite simply, because community-basedmanagement still result in the application of any method forgoverningcapaci
decisions within the community, there is the possibility ofusing incentive-blocking measures to mitigate, not correct, capacityproblems.Nonetheless, a number of exceptions to this general result exist andwhere groups have adopted capacity correcting measures. In the UnitedStates examples of this include: the wreckfish fishery inthesoutheastern
region, the halibut and sablefish fisheries in thenorthwest and Alaskan fisheries, and the surf clam fishery in themid-Atlantic region of the United States. Similarly, theCommunityDevelo
Quotas (CDQs) instituted for Alaskan native tribes serveas an example of an effective group fishing rights program: becausethe community can effectively control effort, they are able toreducecapacity.
Territorial use rights (TURFs)TURFs are another means to control capacity by causing fishermen tobehave as if property rights for a fishing ground exist. Access to,and use of, a particular fishing ground or site is restricted to asmall group or an individual, and this group can determine how toharvest fish from the site and to whom the fish getsallocated.Oyste
leases can be considered a form of TURFs, and a studycomparingprivat
ownership to public access revealed that the TURFs resulted inboth a reduction in capital investment and an increase in laboremployed to harvest oysters (Agnello and Donnelley, 1976).5.5 Strategic CapacityManagementThere
is a plethora of management tools that can be used in the effortto try to mitigate or otherwise manage capacity problems.The most durable solutions to overcapacity in fisheries come under thecategory of incentive adjusting capacity correcting measures, but theuse of these strategies may actually require changingexistingmanagem
approaches, and this is not necessarily simple to do.Alternative, interim measure can be implemented, butthenconsiderati
must be given to both the near and longer termincentives and impacts that these measures create. Ultimately, theactual adoption of capacity mitigating or capacity correcting measuresis a political decision and, as such, may not necessarily relatedirectly to the most technically efficient strategy.
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